Despite the Bank of England holding base rate at 0.5% for nearly three years the Halifax has announced it will be increasing its Standard Variable Rate (SVR).
The move will see the Halifax’s SVR jump from 3.50% to 3.99% from 1st May 2012 and will affect borrowers currently on the SVR or with mortgage products, principally discounted rate mortgages, linked to it.
The Halifax said that the rise was necessary due to the increased cost of raising funds to lend in the form of mortgages from both savers and the financial markets.
In a statement the Halifax said: “The change acknowledges that the cost of funding a mortgage in today’s market remains significantly higher than the longer term average.”
The statement continued: “The increase to the rate reflects the fact that raising money through retail savings and in the wholesale markets is currently very expensive by historical standards.”
Natwest & RBS increase SVR on two mortgage products
The news comes just days after RBS announced it too would be increasing the SVR on two of their mortgage products from 3.75% to 4%.
The mortgages affected are the ‘Offset’ and ‘One Account’ mortgages and will see payments rise for around 200,000 borrowers.
The announcement by the Halifax, as well as that by RBS, has prompted angry reaction from consumer groups.
Marc Gander founder of the Consumer Action Group, said: “It’s shocking, it’s coming at a time when people need this thing least of all.”
He continued: “Banks have never had it so good. They are doing fabulously well and it amazes me that they can’t decide to share some of the burden that the rest of us are sharing.
“If they are saying they have to pass on rising costs, why can’t they pass some of the good times on as well as the bad times?”
Many mortgage experts have predicted that other banks and building socities could not follow in the same direction, pushing up mortgage interest rates foir borrowers on the SVR or with products linked to it.